In 2024 the Debt Relief Order (DRO) rules have been relaxed so a lot more people qualify. For example, the maximum limit of debts in a DRO has now been increased to £50,000 and you can also own a car worth up to £4,000.
Will you now qualify for a DRO? If you are in an IVA, you are renting and your IVA payments are less than about £120 a month, you may be much better off switching from an IVA to a DRO.
In 2024 many people are struggling with their IVA payments because of the cost of living. The option of failing your IVA and having a DRO instead can be very useful. Especially ifyou are early in your IVA and you are not sure you will be able to get to the end.
Contents
Why a DRO is better than an IVA
If you qualify for a DRO, it will be better than your IVA in three ways:
- You don’t have to make any monthly payments in a DRO.
- A DRO only lasts for a year – at the end of twelve months, your debts are written off. So if your IVA has years to go, a DRO will clear your debts more quickly.
- DROs very rarely fail – only about 1% go wrong. A lot of IVAs fail, possibly more than 20%, when people can no longer manage to make the monthly payments.
So a DRO is cheaper, shorter and less risky than an IVA.
When you started the IVA it probably felt like the answer to all your money problems. But if you don’t think you can get to the end of your IVA, it’s better to face up to this now, not try to postpone the decision.
You aren’t alone in this situation, debt advisers are seeing more people wanting help with an IVA they can no longer afford. Often nothing can be done to rescue a failing IVA.
Your IVA may have been sensible when it was started, but a change in circumstances (pay drop? new baby? separation? cost of living increases?) may now be make it hard to afford the payments.
Perhaps a DRO would always have been better than an IVA for you but no-one explained this at the start. Or a DRO may now be right for you because of the change to the rules in 2024.
Cost of living increases mean many IVAs are now unaffordable
Increased food, energy, and other prices mean that in 2024 many IVAs that were previously manageable have become unaffordable.
In June 2022, new guidance was issued by the Insolvency Service – see Help with IVAs if you can’t pay because of the cost of living where I look at the new guidance and the options it now gives you.
In trying to reach an agreement with your IVA firm about this, it will help a lot if you know whether you will qualify for a DRO. If you do qualify for a DRO, one option is to fail the IVA and now get a DRO. But another option is to ask your IVA firm to propose to your creditors that your IVA is completed “on the basis of funds paid to date”. This would then all be over quicker for you than failing an IVA and then having a DRO.
Find out if you qualify for a DRO
As you are thinking about a major change, you must make sure you would qualify for a DRO, not just assume that you will.
Unlike the other main debt solutions (debt management, bankruptcy, IVA) there are some very specific checks that you have to pass to qualify for a DRO. The main ones are:
- your debts have to come to less than £50,000;
- you can’t own a property. This is a strict rule – it doesn’t matter if there is negative equity, if you don’t live there, if it can’t be sold… it will still stop you qualifying for a DRO;
- a car you own must be worth less than £4,000;
- you can’t have had a previous DRO within the last six years;
- you have little spare income (under £75) each month after all your expenses.
The “under £75” spare income is the hardest for you to assess.
Your IVA firm may have said you can afford to pay £95 a month to the IVA – that sounds as though it is more than the £75 maximum allowed for a DRO… but the DRO calculations are different, you may be allowed more money for some expenses than your IVA firm permitted.
As a rule of thumb I would say that many people paying £100 a month to an IVA may qualify for a DRO now. And some people paying more, say £120, may qualify.
If your only income is from benefits then you will always qualify for a DRO (providing you meet the other criteria, eg your debts are under the maximum limit). This is even if you get a lot of disability benefits, because a DRO allows for your extra disability costs.
The best thing to do is to talk to an adviser who can look in detail and say if you can have a DRO. I suggest you call National Debtline on 0808 808 4000.
The answer may be that you don’t qualify for a DRO, but you may have other options the adviser can help you consider. If your IVA is unaffordable but your debts are too large, bankruptcy may be a better choice. A debt management plan usually isn’t – even if would have been better at the start, now you have the IVA on your credit record it is usually best to carry on with it.
Is switching to a DRO a good idea?
If you are told you will be able to get a DRO, you need to decide if it is a good idea to end your IVA and start a DRO.
This mainly depends on how far you are through your IVA.
If you are early in your IVA
If you are having problems in the first half of your IVA you may never get to the end of it, so taking action now is a good idea.
A DRO will be all over in a year and you don’t have to make any payments in that year at all.
The only downside is that the DRO will be on your credit record for six years, but that’s usually pretty minor as your credit record is already very poor because of the IVA.
If you are in the second half of your IVA
When you are over half way through your IVA, a DRO may still be your best move but look at other options first and talk to your IVA firm about these. Tell your IVA firm that you have looked into a DRO and you would qualify for one but you want to know what your alternatives are.
Two possible options to discuss with your IVA firm are:
- reducing your payments to an affordable level. Your IVA firm will be able to reduce them by 15%. If a larger cut is needed, your creditors would be asked to approve this;
- finishing your IVA on a “funds paid to date” basis. This is completing your IVA so your debts are wiped out, not failing your IVA. It would mean you don’t have to pay any more. The further you are through your IVA the more likely this is to be approved – in your last year this should definitely be tried first, rather than failing the IVA and starting a DRO!
You should be wary of your IVA firm proposing things that will mean your IVA goes on for even longer. For example they may say they will accept lower payment if you add an extra year on. Sometimes a payment break of 6 months can work well, but is it likely your situation will have improved at the end of it? The longer your IVA will continue for, the more attractive the idea of stopping it and getting a DRO is.
Also be careful about a reduction in payments – lower will obviously be better, but will you still be struggling? Don’t think lower must be affordable, think how long your IVA will go on for and whether you are likely to get to the end.
How do you change to a DRO?
There isn’t a simple way to switch over. Your IVA needs to fail first, so you have to stop paying. Tell your IVA firm that you are stopping making your IVA payments and that you want the IVA to fail as soon as possible.
Don’t worry that you will get hassled by your creditors when you stop paying the IVA firm. They can’t do this until the IVA has terminated.
It will take a few months to fail your IVA. During this time your debt adviser can get your DRO application prepared so it can go in quickly after your IVA is formally marked as failed.
What happens when an IVA fails?
What happens if you can’t afford your IVA?
Inflation? Get lower IVA payments
Ms Tracy Hill says
hi,
i am unemployed and having problems paying my iva. i have used up all of my payment breaks so creditfix tried to get my iva paid off with what i had paid already which the creditors rejected. i am now trying to change over to a DRO but still waiting for them to get back to me. your advise is very helpful.
Sara (Debt Camel) says
You are renting? Your debts are less than 30k? Do you have a car?
Tracy Hill says
Yes, I am renting, don’t have a car, and no savings left. Only getting universal credit at the moment so trying to survive on £650 each month is hard.
Sara (Debt Camel) says
Then it sounds as though you are very likely to be eligible for a DRO. What is the chance if you finding a good job in the next year?
Ms Tracy Hill says
i am looking for work from home jobs due to my health and have hopes i should get something soon but they are usually short term contracts or at least the ones i have had in the past year have been.
Sara (Debt Camel) says
I think you should talk to National Debtline on 0808 808 4000 about your options. If you can’t pay the IVA it waill fail. endless breaks don’t actually make progress in getting you out of debt. A DRO may well be a good option for you.
Jb says
I am at the end of my Iva it was supposed to end in 2021, they are saying I now owe £4000 due to a change of circumstances as I was unemployed and went to employed, they want £400 a month which I can’t afford I’ve sent in expenditures, wage slips, bank statement you name it and they just ignore me they told me at Christmas that it was being sent to my creditors for review but never came back to me and now want me to start all over again, I just don’t know what to do I can’t afford to pay what they want I’m a single parent I’ve not worked for a year as I almost died from covid and there is no help anywhere
Sara (Debt Camel) says
Can I ask if you are renting? Do you own a car worth over £2,000?
How large were the debts that went into your IVA?
And which IVA firm is this?
Km says
Hi Sara,
Please could you help me. I am in my 3rd year of my Iva started January 2020, again like the others I was not advised of a dro and felt pushed into an iva when I was struggling with the debt. My Iva are currently wanting an updated i&e plus bank statements etc, i am currently paying £100 a month to catch up with arrears. Would you advise it’s best to carry on with the Iva for next 3 years, or have this fail and go into a dro, only because I cannot afford to pay more than £100 a month, I now have a job yet when my last i&e was done in 2021 I was only on UC getting £500 a month I have a child and they still expected me to pay £80 even though I was in negative after my I&e was completed. The company my Iva is with have gone into administration, I just feel lost whether to continue the payments for the next 3 years or start again but then having a negative impact on my credit file for the next 6 years instead of 3, I have a car on finance which is up in July with a balloon payment of £5000 which I will not be able to afford.
Thankyou
Sara (Debt Camel) says
Can you manage without the car?
Km says
Yes I can manage without the car, I’m currently in the process of adding it to my Iva, I have had to pay a lot of money out to have the car fixed and cannot afford it anymore.
Thankyou
Sara (Debt Camel) says
So the question for a DRO is after you stop making payments on the car, how much surplus income will you have? I suggest you talk to National Debtline on 0808 808 4000 about this. If they say you will qualify for a DRO, they can talk you through the pros and cons of failing your IVA and going for a DRO.
Tracey says
Hi I’ve terminated my iva as it was presure. I was scared of bailiffs I live alone I’m a tenant I don’t drive and have no assets my debt is under 30k and I’m on benefits I suffer from depression and anxiety. And I wondering if I can go for a dro I only have 36.00per month left
Sara (Debt Camel) says
I think you should talk to a debt adviser straight away about this. Go to your local Citizens Advice, or if you would prefer the phone call National Debtline on 0808 808 4000
Tracey says
I have spoken to stepchange they recommend. A dro but have to wait as missing sold a iva used my housing and disability. Benefitsfit foe extra income and made myoutgoings more so it looked like I could have £-00.00left per month this was not right I terminated after proposal and been told I could have a 3month wait for letter. From I v a and now I have seen they charge fees too no payment I made to them not one so I termination letter I can’t wait 3months it’s frightening as I was only in a proposal please what can i do
Tracey says
I’ve been told by stepchange that the I p could send a letter or email to say that the iva is cancelled so at least it could be quiker I could send to stepchange and money wellness so I can get a dro
Sara (Debt Camel) says
So you have stopped paying the debts in your IVA?
And you haven’t made any payments to the IVA?
Are there any debts not included in your IVA that will go into a DRO?
Are you paying any council tax?
What debt have you been contacted by bailiffs about?
Who is your IVA firm?
(sorry for all the questions!)
Tracey says
I have been informed I do not need termination letter of iva as it was only a propsal not approved and no payments made so I was only with it 10days so I can go ahead with dro
Sara (Debt Camel) says
OK in that case you can have a DRO now. Your name would not be on the Insolvency Service register as having an IVA until after it was approved.
Jane says
Hi I’ve been in iva now for 18 months .now not in work suffer with depression and Iva just wants to put me on payment breaks
Help how do I apply for a dro I’m worried sick
Sara (Debt Camel) says
Can I ask how large the debts were going into your IVA? How much you were paying a month before you lost your job? Were these payments easy to manage at that point?
Are you buying or renting? Do you own a car that is worth more than £2,000?
Tracey says
Hi I was missing sold a iva as I was unemployed. and on benefits you will need a termination letter and apply for a dro which has a one of payment of 90.00 and if after a year no change it gets all bills written off
Jane says
Roughly 11,000
£80 a month ..I now have no income at all my son is covering all household bills
Renting
Sara (Debt Camel) says
You may well be eligible for a DRO.
Are you claiming any benefits?
How long ago did your IVA start and how many payments did you make?
Jane says
Iva started 22.
I’ve made 16 payments none since unemployed so 1 missed.
I’m not claiming benefits as past experience they got me in more debt due to over payments and fluctuations in council tax benefit..
Sara (Debt Camel) says
I understand what you are saying, but it seems hard for your son to have to make all the payments for what may be a prolonged period. I think you should reconsider applying for Universal Credit and council tax benefit.
Were the £80 a month payments hard to afford before you lost your job? If they were, then it makes sense to look at a DRO now. I suggest you go to your local Citizens Advice and get advice about a DRO – this isn’t something you can apply for yourself, it has to go through an approved DRO adviser. Citizens Advice can also talk about benefits.
Jane says
I know I can apply for a dro I’ve spoken to step change .
It’s the iva company that are being difficult I told them I want to apply for a dro and they keep say I have to go through 9 months of payment breaks 1st..
I’ve already had advise on council tax benefit as my sons income is so high I will not be eligible as council tax benefit goes on house hold income weather your financially linked or not
Sara (Debt Camel) says
which IVA firm is this?
Jane says
NDH FINANCIAL
Sara (Debt Camel) says
OK email jonathan.gribble@ndhfinancial.co.uk and say StepChange have told you you are eligible for a DRO, so you want your IVA terminated as soon as possible.
You haven’t said anything about whether the IVA payments were difficult to afford before you lost your job. If they were you should also mention this.
If you think you would also have been eligible for a DRO last year when your IVA started, you could also say that and that you think the IVA may have been mis-sold.
Jane says
They wasn’t really but ndh said looking at what my wage was and outgoings it was it just left me with nothing once I had paid ndh.
Emma says
I am on an IVA with Creditfix I feel like I was pushed into it instead of exploring other options. With the cost of living & winter coming I will be able to pay for gas electric or food through the winter. My curret IVA is in month 13/60 I pay £90 a month I work part time & claim universal credit. My 21 year old daughter (full time student) who lives with me receives PIP & has a motability car which I drive as shes not allowed a license & I fully support her as she was turned down for U/C My debts are under 20000 would I be better off trying for a DRO? I rent from a Housing association.
Sara (Debt Camel) says
A DRO may well be an option for you. The motability car is wouldn’t be affected.
I suggest you tell Credit flux you won’t me able to afford heating and food this winter and ask Creditfix to consider if you are eligible for a DRO – if they say yes, they should organise this for you.
If they say no, then talk to National Debtline on 0808 808 4000
Mike says
Hi. I’m currently half way through an IVA paying £125 to McCambridge Duffy (30 months remain). I’m a full time student nurse and I’m also trying to work full time to make ends meet. I have a private house which I rent alone, a car valued at £900 so that I can actually get to and from work and placements. I’ve had to miss two payments on this and I’m being chased by them for it. I made one payment to them to catch up and they’ve moved the rest over to the end of the agreement. For the past three years I’ve been making payments to it I’m supposed to have reviews and I supply all kinds to them but never hear back regarding it. I’ve pushed and pushed.
My debt remaining to pay is £3875 but if I cancel then my debts going to go right back up to £8k isn’t it if creditors chase me again.
What are my options? Who can I talk to? I’m running myself into the ground and I’m scared. I’m considering leaving my degree which I’m doing to better my prospects and life.
Michael Peoples says
Hello Mike. I work for McCambridge,Duffy and apologies if you feel let down in any way by us but we are here to help. A DRO may be an option but there is also a possibility of closing the IVA down based on an early settlement or funds paid to date. You can contact supervision@ and then our address or if you want to contact me directly my email is mpeoples@. I or one of our supervision team will be in touch to discuss things with you and see what your best option would be so please get in touch.
Georgie says
Hi Sara
What happens if within the 12 months of starting a DRO, your financial position improves or you get a job? Would your debt be resorted back to the IVA agreement?
Thanks
Sara (Debt Camel) says
No the IVA will have terminated.
In practice very few DROs fail… about 1%. Do you expect your finances to improve a lot? Remember that if you get any benefits, they will reduce if you get a pay rise or work extra hours.
How far are you through your IVA?
Georgie says
17 months into my IVA.
– First 9 months have been paid at £90ea month as I was working.
– the last 8 months have been payment breaks as I’m on £650 a month via benefits.
I am currently getting £1000 from this month through benefits and I’m not sure when I’ll be able to return to work yet.
Many thanks
Sara (Debt Camel) says
So in practice you are only 9 months in…
In that case there seems very little chance of your IVA completing as you have 4 years and 3 months of payments to go… unless you think you would be able to return to a much better job, ending the IVA and switching to a DRO seems a better option.
Do you mind saying how old you are and what your health problems are? What sorts of debts are in your IVA?
Georgie says
I an 34, I lost my son unexpectedly last year
It’s mainly credit card debt
Sara (Debt Camel) says
I am so sorry to hear that. Can I ask who your IVA firm is?
Because one option is for the IVA firm to propose to your creditors that your IVA is ended now as though you have completed it and the debts are written off, so you would not need a DRO. This isn’t often don in the early stages of an IVA, but given your bereavement it may be possible.
Georgie says
I’m with creditfix, I have been in contact with them over the last 9 months regarding my situation and all they have offered is payment breaks or potentially looking at a dro
Sara (Debt Camel) says
OK, assuming your doctor will confirm that you are not currently fit to return to work, you could ask Creditfix to recommend to your creditors that your IVA is completed “on the basis of the funds made to date” given your circumstances. Point out that you would qualify for a DRO but would prefer to have this settled now because it will be less stress. And that the majority of your creditors are FCA authorised, who should take into account your vulnerability and look for a solution that will give the best customer journey under the circumstances.
If they refuse, then a DRO sounds a preferable option. You could talk to National Debtline on 0808 808 4000 if you are unsure about a DRO.
Samantha Warburton says
Dear Georgie
My name is Samantha Warburton I am one of the Insolvency Practitioners at Creditfix, my email address is samantha.warburton@creditfix.co.uk, if you could contact me directly, I will look into your case personally and we can discuss how to move forward.
Kind regards
Sam
Jb says
Hello
I’ve been in an iva agreement since the beginning of the year. My original debt is £4190.29 the total repayments amount to £9072.96. I was not made aware at the time of agreement that I would be paying more than double my original debts! Is this right?
Sara (Debt Camel) says
What are your monthly payments and have they increased from the start?
What sort of debts are in the IVA?
Who is your IVA firm?
Bethany says
Hi,
My IVA has suggested I apply for a DRO as I’m on maternity leave as a single mum with little income. I receive UC too. I took a 6 month break but now the payments need to restart and I cannot pay them. My debts are less than 30k I rent also don’t own a car. How would I go about the process please? Thanks
Sara (Debt Camel) says
Hi Bethany,
how far into your IVA are you? What sort of debts are in the IVA? do you have any debts outseide the IVA?
and can you say who your IVA firm is – are they asking if you want to do this or telling you that that they are failing your IVA?
Bethany says
Hi, I have no debts outside the IVA. Most of the debts were credit cards & store accounts. I’m around 14 months into the IVA. The firm is McCambridge Duffy, they at the moment have more just suggested it but have been limited with my options and help.
Sara (Debt Camel) says
ok, well nothing you have said suggests that a DRO is not a good idea. But there may be a better option – MCD proposing to your creditors that you have no prospect of continuing with the IVA and that you could get a DRO, but in the interest of promoting a good customer journey, in line with the new Consumer Duty, MCG suggest that instead your IVA is completed on the basis of the funds paid to date.
(That is quite o lot of jargon, but it will make sense to MCD. If they agree, and your creditors agree, then your IVA can end now and your debts will be written off.)
Bethany says
So I can suggest this even if I’ve had a payment break for 6 months? I’ve paid £300 per month from June 2022- may 2023. Could this be a strong possibility? Thanks
Sara (Debt Camel) says
It is hard for me to say whether this is a “strong possibility” or not. Usually you have to have made more payments to get a “completed on the basis of the fund paid to date” agreed. But at the end of July the new “Consumer Duty” came into force and creditors who are FCA regulated 9that is all banks and credit card companies) now have to consider this.
Let’s see what MCD say.
Nicola says
Hi I’ve started a Iva but on benefits the Iva wants £126 a month saying I can afford it but I can’t with cost living I think I’m better of with dro I have to wait to get it terminated but worried as it take 3 months what do I do please help Nicola .
Sara (Debt Camel) says
Have you talked to a DRO adviser to confirm that you would be eligible?
How long ago did your IVA start?
What sort of debts are in the IVA and do you have any that are not included?
Nicola says
No not talk to dro yet I’m going citizen advice because no one seems to no how to help me out lots debt Marston Lowell etc started couple weeks ago .
Sara (Debt Camel) says
who is the IVA firm?
If the IVA payments aren’t affordable, then you definitely need a better option. If there was 6 months to go, it would be worth trying to get through to the end but so early in the first year, this is not sustainable.
There is no need to worry about the IVA taking 3 months to fail – during this time the creditors in it can’t take any action against you. And if you are eligible for a DRO, your DRO application can be prepared so it is ready to be submitted as soon as the IVA fails.
Nicola says
So I just leave it till termination yh then go for dro ?
Sara (Debt Camel) says
It takes a while to get a DRO application ready. So I think you should talk to Citizens Advice now about this, so they can confirm you are eligible and can start the process of getting the DRO application together. Then it will be ready to go when the IVA fails.
Adam says
Hello, I went into an IVA in Jan if 2021. I have 26k debt, my car is worth less than 2K and I qualify for a DRO. I can no longer afford my IVA payments with the cost of everything going up, what are the chances of my IVA company ending my IVA on funds completed to date? If not and I fail the IVA what is the likelihood of my creditors chasing me in the break between the IVA ending and the DRO going in? Appreciate any help
Sara (Debt Camel) says
I qualify for a DRO
you have taken advice on this?
I can no longer afford my IVA payments
how much have you been paying?
what is the likelihood of my creditors chasing me in the break between the IVA ending and the DRO going in?
about zero.
Once your IVA is going through the process of being failed, which can take a few months, a debt adviser can get your DRO application ready to go. So there should be a very short gap.
Kirsty says
Hi
I am with Creditfix and have two years left of my IVA (Was originally taken with Freeman Jones then taken over)
I have one wage coming into the house.All my bills have gone up, Rent has doubled and just done my annual review and obvs i can’t afford my monthly payment of £154.00 and was advised if I drop my payment it will extend my IVA another 2 years which I don’t want. When i get my annual statement it doesnt look like my debt is reducing but the fees are more than the debt. Can I cancel the IVA and get a DRO. I am struggling and just feel I have nothing for myself.
Sara (Debt Camel) says
I think you need advice on whether you will qualify for a DRO. Talk to National Debtline on 0808 808 4000. Then you can make an informed decision.
Stephanie says
Hello, i’ve an IVA off £190 started in Aug – I simply can’t afford it anymore and i’ve also been recently diagnosed with Bi polar disorder! Advice please and thank you 😊
I do own a car I use it for work, i’m only working part time now because of my mental health issue.
Sara (Debt Camel) says
How much is the car worth? How large are the debts that went into your IVA and what sort of debts were they?
Stephanie says
My car has now broken down and will probably have to go to scrap. I can’t drive it anymore because of my metal illness and I’ve been signed of sick for 3 months – I’m still getting sick pay but after all my bills and everything going up £190 is to much to pay towards debt – I feel like I was bullied into the IVA. Since posting i’ve spoken to another financial advisor who says to ignore credix fix and creditors won’t chase me for a few months and get DRO in place?
Sara (Debt Camel) says
I don’t know who that financial adviser is, but it’s better to get things properly sorted out. Creditfix would actually have to fail your IVA before a DRO can be set up. If Creditfix put you on a payment break because of your health problems, that is not failing the IVA.
I think your first step should be to talk to Creditfix about what you want know (to not make any IVA payments) and for how long your sick leave may last. If this is going to be prolonged, then discuss with Creditfix whether a DRO would be a better idea.
Stephanie Chapman says
Hi Stephanie,
Can you please contact me directly at stephanie.chapman@creditfix.co.uk and I will ensure you get the help you need to get the best outcome now that your circumstances have changed.
Kind regards
Stephanie
Niram says
Hi,
Just signed a proposal for an IVA, hopefully it will be accepted by creditors.
At the moment I can afford payment the monthly IVA payments, bur my circumstances will change in the future.
I will be moving abroad, and obviously I will terminate my employment contract.
No savings, no assets.
I might be unemployed living on my partner place abroad, also I might get into an integration program which can take 3years, so will be leaving on benefits and unemployment, till my integration finishes, it a qualification and language course.
I will look to get a job asap, but as is not secure, what can I do with my IVA ?
I do not want to leave from Uk leaving bad things behind.
How long before do I need to see if I can qualify for an DROn?
Before my employment contract finishes? Or after?
What can be done avoiding any unpleasant consequences.
Thank you
Sara (Debt Camel) says
Has the IVA been voted on? If not you need to tell the IVA firm IMMEDIATELY that you do not want to proceed as you are planning on moving abroad and will be studying and on a low income. Email your main contact and also the Insolvency Practioner that is listed on your paperwork – if you let me know the name I can give you their email address.
There is no reason to rush to set up an IVA now and it will cause you problems to get out of it later, so avoid this mess. Instead talk to StepChange about a debt management plan for your current situation.
Niram says
Hi Sara,
The proposal was not voted yet, my moving plan is not on the track yet.
It might take another year and at the moment I m struggling with some debt payments.
At the moment I m full employment, and the IVA is helpful in reducing my monthly payments till my situation will either get better or worse.
My question is can I later choose an DRO if my situation changes?
How long after my employment contract finishes I need to apply for DRO ?
Thabk you
Sara (Debt Camel) says
At the moment I m full employment, and the IVA is helpful in reducing my monthly payments till my situation will either get better or worse.
this is exactly what a debt management plan will do. Talk to StepChange – their DMP does not have any fees so all of your monthly payments go to clearing your debts, unlike IVAs where a lot of your payments to goes to the IVA firms fees.
A DMP sounds massively more suitable for you – do you have any concerns about it? You can reduce the payments, to nothing if you need, while you move abroad.
You can not easily choose to switch to a DRO from an IVA, especially if you are abroad. First you have to stop paying the IVA for several months and then get your IVA firm to fail it which can take several months.
Nir says
The IVA debate is on 08/02/24
My adviser is STEVEN COOKE
Can this be change yet or not ?
Thank you
Sara (Debt Camel) says
That is plenty of time to cancel the creditor vote – this afternoon would have been a challenge!
His email address if stevec@insolvencyexpertsltd.co.uk You need to be clear that although you have signed the paperwork you have changed your mind and do not now want to proceed with an IVA so you want the creditors meeting cancelled.
Explain you now expect to leave your job and go abroad, where you may be studying for a long period.
And talk to StepChange now about a debt management plan.
Sarah says
Hi there, I have just had my IVA paperwork sent to me to sign, this has been based on household income and expenditure with my husbands salary etc. He is aware I have debt but not the total I have and this would have a severe impact on the marriage. A few issues have caused the debt of which should not be a cause for concern anymore. Presently it has been advised there is £124 a month left to pay to creditors. This is a mix of loans and credit cards and 1 ccj that was registered in 2018 or 19. I have since spoken with Stepchange and based solely on my income and what I pay out I am in a deficit of about £60 a month with nothing to pay creditors and they have advised PS to creditors with a view to applying for a DRO. There is no shared debt, simply a joint bank account I have not used for about 6 years so will be coming off of that. I suppose my question is is the criteria for a DRO looked at differently as monies out are capped with the IVA I have had prepared. I’m also not sure they have taken into account my husbands debt he pays each month. They did not 8nclude one of his wages for the purposes of IVA as he hopes to retire from that one this year so would not be in the income for the term of the IVA. Would this be the case for the DRO aswell? Thank you.
Sara (Debt Camel) says
who was the IVA proposal from, StepChange or another firm? if it’s another firm, who is it?
they have advised PS to creditors
what exactly are StepChange advising?
the joint bank account – is there an overdraft on that that is being used?
how large are your total debts?
Kevin says
Hi There
I went in to an IVA two years ago with McCambridge,Duffy paying £324.00 per month i had a break for two months when a relative died im self employed via a limited company which we have been struggling for the last 12 months and i will prob have to close down in the next month or two leaving me with no income for an unknown period of time. Last year i struggled to just make the payments with nothing left over. Would an DRO be an option
Sara (Debt Camel) says
How large are the debts that went into the IVA?
What are your plans to get a job? If you move into employment quickly, it may be better to complete the IVA, possibly at a reduced monthly payment.
kevin says
just over 33k on the 14/02/22
Once the final decision is made il be looking for work asap
Sara (Debt Camel) says
So in 2022 you would have been ineligible for a DRO as you had debts over 230k. But today in the budget, if you are in England or Wales, it has been announced that the DRO maximmum limit is increasing to £50,000. See https://debtcamel.co.uk/dros-changes-2024-budget/
But the question remains, what income will you get from a job? It may be better to get a job first and then make this decision.
Michael Peoples says
Hi Kevin. I work for McCambridge, Duffy and feel free to give us a call. We can give a longer payment break or look at other options including a DRO if this is suitable. It may even be possible to close the IVA down early if you are not able to make payments going forward.
You cannot be a director if you apply for a DRO so could this affect you going forward?
Kevin says
Not being a director wont be an issue now it was whens i started the IVA but now the company I run looks like it will cease and i wont put myself through this again
Michael Peoples says
I agree with Sara that it would be easier if you knew what you would be doing and earning going forward. You could continue on with the IVA at a reduced amount or possibly close it down with funds paid to date or a third party offer of settlement. We could organise a break while you seek new employment and do a new I&E when this has happened which would make it much simpler to advise.
Lisa says
Hi
I have an IVA with 2years left,no car housing association tenant,full time employed but am just struggling with increased bills and cost of living etc, I pay £115 a month with Creditfix. Would a DRO be a better option?
Sara (Debt Camel) says
do you have any arrears or debts outside the IVA ?
Adam says
Hello again, I spoke to ebenegate last month after providing bank statements they stated my disposable income after bills was just over £50.
I had asked that they could request the IVA because closed on funds paid to date due to it no longer being affordable for myself due to rising costs. I have paid almost half of my IVA but they have came back and said that the creditors have rejected my meeting due to drop in dividends. They are now suggesting that I get payment breaks, no mention of reducing any payment etc. does this mean the creditors refused to close it or refused the meeting? Given I qualify for a DRO and have explained this to ebenegate what would my options be now? Just to mis payments until it cancels? Then get a DRO
Sara (Debt Camel) says
In January I asked you the following questions, could you answer them now?
– have you taken advice on whether you qualify for a DRO?
– how large are your IVA monthly payments?
they have came back and said that the creditors have rejected my meeting due to drop in dividends
Creditors can’t refuse to have a meeting – what isn’t clear is if Ebenegate has refused to call one or if there was one and the creditors rejected the proposal. I suggest you ask ebenegate what has actually happened.
who is your IVA firm?
Cara English says
Hi Adam,
Could you contact me directly at cara.english@ebenegate.co.uk and I’ll look into your case and we can discuss what occurred with your request and explore what options might be best for your current circumstances.
Best regards
Cara
Adam says
Hello Sara,
Yes I spoke to citizens advice back in January and they said I qualified for a DRO as I don’t have a car over the threshold and my debts are below the cap and my spare income is below the cap.
My monthly payments are around £160
Almost half of the funds have been paid into the IVA.
My IVA was initially through creditfix which then passed me to ebenegate
Sara (Debt Camel) says
ok, see the comment above from Cara at Ebenegate – I suggest you contact her and I would be interested to know how this gets progressed.
Carlie james says
I am hoping you can help. I have spoken to Citizens Advice who say I can have a DRO once my IVA is terminated. But Creditfix refuse to speak to me about terminating my IVA. It is an IVA that I went in to with my ex and apparently he is the “lead” person named on the paperwork so Creditfix say they will only speak to him. That is not possible as we do not have contact. The IVA has been in place since 2015 and I am not paying it. I can only assume my ex is paying it because Citizens Advice say it would usually have failed by now. What can I do to get the IVA stopped?
Teala Elsy says
Dear Carlie,
I am the complaints manager at CreditFix, I’m sorry to hear you have not received the assistance you should have from us. Could you contact me by email at teala.elsy@creditfix.co.uk and we will arrange an appointment to go over your queries? I will review your case and we’ll discuss the options available and their suitability for your circumstances.
Kind regards,
Teala